NBC and Microsoft Unveil Plans for 24-Hour News Channel

Strategic Insights -

NBC's main objective in the new venture is to ensure access to novel distribution methods and expand its presence globally. The announcement comes on the heels of ABC's statement about launching its own continuous news channel in early 1997. This move is part of an existing partnership between NBC and Microsoft, which will provide news and financial coverage for the new Microsoft Network on-line service. Under the deal, Microsoft will spend $220-million for a 50-per-cent stake in the new channel, initially to be known as MSNBC.

Key Takeaways:

  • NBC's primary interests in the new channel are ensuring access to new distribution methods and developing its presence globally.
  • The announcement follows ABC's statement about launching its own continuous news channel in early 1997.
  • Microsoft will spend $220-million for a 50-per-cent stake in the new channel, initially to be known as MSNBC.
  • The move is part of an existing partnership between NBC and Microsoft, which will provide news and financial coverage for the new Microsoft Network on-line service.
  • The new channel will have an interactive component developed in collaboration with Microsoft.
  • NBC will have a 24-hour news channel that can be converted from its existing cable channel, allowing for minimal startup costs.
  • ABC will need to negotiate new distribution slots for its channel, given that NBC already owns a cable channel with 20 million subscribers.
  • Turner's merger with Time Warner has cemented CNN's ties with the two largest cable operators, making it challenging for NBC and ABC to gain distribution.
  • The networks consider 24-hour news channels a relatively cheap way to increase their involvement in other means of delivering programming.
  • Broadcasters are exploring four options for delivering programming: additional broadcast channels, telephone companies, satellite broadcasting, and on-line services.
  • Working with Microsoft gives NBC links to a company shaping the media and customer relationship development.
  • International ambitions include adding a 24-hour news channel to bundle services with a global reach, delivered by satellite to subscribers.

Statistics:

  • $220-million: Microsoft's investment in the new channel.
  • 50-per-cent: Microsoft's stake in the new channel, initially to be known as MSNBC.
  • 20 million: The number of subscribers for NBC's existing cable channel that can be converted into the 24-hour news channel.
  • 1997: The year when ABC plans to launch its continuous news channel.
  • 1/3: The proportion of cable subscribers covered by Time Warner and Tele-Communications Inc.
  • 175: The number of channels available via direct satellite broadcasting.

Sources:

  • Oxford Analytica Ltd. Copyright 1995
  • NBC press release, December 15, 1995
  • ABC press release, December 1, 1995
  • Microsoft press release, December 15, 1995
  • Turner Broadcasting Co. press release, January 10, 1995
  • Time Warner press release, March 10, 1995
  • Tele-Communications Inc. press release, February 20, 1995